March 31, 2017 | Authored by: Vindicia Team Blogs
Innovating IoT solutions with subscription billing
Technology and the business world evolve side by side. Case in point: The Internet of Things (IoT) is steadily revolutionizing the way consumers navigate their daily lives. IoT solutions are also expanding into the business-to-business sector, delivering accurate, responsive reporting. Such innovative technology needs a proper billing solution, one that factors in customer retention and provides for a recurring service. After all, IoT solutions aren't a one-time use product. A subscription billing model takes into account the ongoing nature of IoT services.
"70 percent of IoT solutions providers do not profit from their product."
Each day, developers get better at programming more accurate, responsive IoT products. These solutions, ranging from coffee makers to smart cars, must take into account a huge amount of data including consumer habits, preferences and safety. While businesses are providing better products, they aren't as adept at monetizing these solutions. ITProPortal cited a survey by consulting company Capgemini that found 70 percent of IoT solutions providers do not profit from their product. Without these profits, there's little reason to invest in the industry and thus propel innovation.
Kii Corporation co-founder and CEO Masanari Arai spoke to ITProPortal about how IoT solutions are perfectly structured for recurring monthly payments.
"Instead of just selling hardware and getting one-time revenue, there is opportunity for organizations to receive monthly recurring revenue," he told the publication. "This means that they won't have to worry about hardware cost. There will therefore be a priority business model shift, from focusing on such costs, to keeping retention."
Indeed, recurring billing solutions provide businesses with a dependable source of revenue. This allows them to direct their focus to the customer experience, thus improving retention and - through marketing and word-of-mouth - customer acquisition. These new customers flow back into that consistent source of revenue, letting IoT providers profit and innovate.
Trust and customer retention
As ITProPortal noted, the prevalence of data does more than provide programmers with the knowledge required to build better technology. It also allows businesses to provide their customers with a personalized experience. This personalization works best by solving particular pain points, Arai stated. For instance, automatic recurring billing solves the issue of requiring consumers to input their payment information on a consistent basis. They're able to enjoy a product or service without having to log into their user account each time and type in their credit card data.
By eliminating these pain points, businesses are well on their way to gaining their consumers' trust. As Retail Customer Experience noted, IoT providers must earn a customer's confidence to secure and retain that individual. Without this trust, organizations have neither the funding nor the data necessary to provide excellent products.
Consumers trust a business for two primary reasons. To begin with, they have faith in the product or service the business provides. In addition, customers trust a business that is upfront in its communication and does not use practices that appear to trick or mislead them.
Subscription billing models provide a way for businesses to profit off their IoT products. They simplify the payment process and allow consumers and businesses to focus on the service at hand. However, businesses must combine this payment style with customer communications that establish trust in order retain the maximum number of subscribers.
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